Core Viewpoint - 21st Century Education (01598) has confirmed the auction of land use rights held by its subsidiaries due to failure to repay loans, which will not significantly impact the company's daily operations [1][2][3] Group 1: Auction Details - The company received two auction confirmation letters from the Gaoyi County People's Court for land use rights held by its subsidiaries [1] - The land use rights for Land IV, totaling 46,269.12 square meters, were auctioned for RMB 31.4048 million, while another parcel of land, totaling 21,324.05 square meters, was auctioned for RMB 9.744 million [1] Group 2: Loan Agreements and Defaults - In July 2024, Shijiazhuang Zerui entered into a loan agreement with Jiahetai Property for RMB 12.5 million, with Land IV used as collateral [2] - Shijiazhuang Xintianji Education also secured a loan of RMB 12.5 million from Hengfeng Pawn, with the same land used as collateral [2] - In June 2024, another loan agreement was made with Hengfeng Pawn for RMB 10 million, with additional land use rights pledged as collateral [3] Group 3: Impact on Operations - Following the auctions, Shijiazhuang Zerui no longer holds any rights to Land IV or the other land, and the board believes the auctions will not have a significant impact on the group's daily operations [3]

Financial Performance - Total revenue for the six months ended June 30, 2024, was RMB 241,324,000, representing a 25.6% increase from RMB 192,102,000 in the same period of 2023[14]. - Gross profit increased to RMB 103,337,000, up 35.6% from RMB 76,194,000 year-over-year, with a gross margin of 42.8%[14]. - The company reported a pre-tax profit of RMB 30,274,000, a decrease of 8.3% compared to RMB 33,003,000 in the same period of 2023[14]. - EBITDA for the six months ended June 30, 2024, was RMB 94,513,000, a slight increase of 3.4% from RMB 91,414,000 year-over-year[14]. - Basic and diluted earnings per share for the period were RMB 2.71, compared to RMB 2.94 in the same period last year, showing a decline of about 7.8%[100]. - Total comprehensive income for the period was RMB 35,345,000, down from RMB 39,608,000 in the previous year, representing a decrease of approximately 10.7%[100]. - The company reported a profit of RMB 30,972,000 for the period, contributing to a total comprehensive income of RMB 35,345,000[102]. Student and Teacher Metrics - The total number of full-time students as of June 30, 2024, was 24,439, reflecting a 4.3% increase from 23,423 in the previous year[15]. - The total number of full-time teachers increased to 819, up 3.4% from 792 in the previous year[15]. - The student retention rate was 98.3%, slightly down from 98.7% in the previous year[15]. - The employment rate for graduates as of June 30, 2024, is approximately 96.8%, a slight increase of 0.1% from 96.7% in the previous year[24]. - The average revenue per full-time student in vocational education increased to RMB 6,302, up by RMB 1,539 or 32.3% from RMB 4,763 in the same period last year[21]. Educational Offerings and Partnerships - The company operates 11 schools, including one private college and eight kindergartens, as of June 30, 2024[17]. - The company has established 13 industry colleges related to emerging industries, with a total of 29 programs co-developed with 18 enterprises[28]. - The company aims to enhance student capabilities and provide personalized educational services[16]. - The company is focused on integrating education and industry, with a strategy of vertical expansion through school-enterprise cooperation and mergers[16]. - The company has established partnerships with over 700 enterprises, including more than 60 Fortune 500 companies, to collaboratively train nearly 1,000 students annually[31]. Financial Position and Liabilities - As of June 30, 2024, the group had a net current liability of approximately RMB 240.2 million, with current assets decreasing from approximately RMB 674.3 million to RMB 623.6 million[55]. - The debt-to-asset ratio decreased to approximately 63.7% as of June 30, 2024, down from about 66.4% on December 31, 2023, mainly due to a significant reduction in contract liabilities from tuition and accommodation fees[57]. - The company had interest-bearing bank and other borrowings of approximately RMB 894.4 million, with repayment terms ranging from one to seven years and an effective annual interest rate between 4.3% and 10.44%[15]. - The company has capital commitments of RMB 14.2 million as of June 30, 2024, compared to RMB 13.6 million on December 31, 2023, with no authorized but uncontracted capital commitments[59]. Operational Efficiency and Cost Management - Cost of sales rose by approximately 19.0% from RMB 115.9 million to RMB 138.0 million, mainly driven by increased teaching costs due to higher student numbers[44]. - Selling expenses increased by approximately 33.4% from RMB 8.2 million to RMB 10.9 million, mainly due to higher recruitment advertising costs[48]. - Administrative expenses slightly decreased by approximately 0.8% from RMB 34.9 million to RMB 34.6 million, attributed to lower office rental costs[50]. - Financing costs surged by approximately 105.8% from RMB 15.8 million to RMB 32.6 million, primarily due to the cessation of capitalization of interest on loans for new campus construction[52]. Corporate Governance and Shareholder Information - The company has adopted the corporate governance code as per the listing rules and has complied with most of its recommended best practices[72]. - The company will continue to review and monitor its corporate governance practices to ensure compliance with the corporate governance code[72]. - The company did not recommend any interim dividend for the six months ended June 30, 2024, consistent with the previous year[74]. - The company has a total of 1,161,204,000 issued and fully paid ordinary shares as of June 30, 2024, unchanged from December 31, 2023[143]. Future Outlook and Strategic Initiatives - The company aims to enhance brand building and expand its educational offerings while focusing on sustainable development and creating higher value for shareholders and society[42]. - The company is focused on building a new education technology ecosystem, enhancing student engagement and academic planning services[34]. - The company emphasizes digital transformation to optimize overall management and operational efficiency across its educational platforms[38]. - The company aims to attract suitable talent for further development through the share incentive plan[91].

Investment Rating - The report maintains a "Buy" rating for 21st Century Education (01598.HK) [2] Core Views - The company reported a 25.6% year-on-year increase in revenue for the first half of 2024, reaching 241 million yuan, while net profit attributable to shareholders decreased by 7.8% to 31 million yuan [1] - The vocational education segment showed strong growth with a revenue increase of 38.8% year-on-year, while the kindergarten segment faced challenges [1] - The company is expected to continue its growth trajectory with the new campus in Gaoyi expected to contribute positively to performance as student enrollment increases [1] Financial Performance Summary - For the vocational education segment, revenue was 173 million yuan with a student count of 20,252, reflecting a 5.7% increase year-on-year, and average revenue per student increased by 32.3% to 6,302 yuan [1] - The non-vocational education segment generated 69 million yuan in revenue, with high school revenue per student increasing by 7.6% to 9,830 yuan, while kindergarten revenue per student decreased by 4.3% to 10,168 yuan [1] - Gross margin improved by 3.1 percentage points to 42.8%, driven by increased revenue from Shijiazhuang Institute of Technology [1] Future Projections - Revenue projections for 2024-2026 are 531 million yuan, 604 million yuan, and 656 million yuan respectively, with net profits expected to be 46 million yuan, 67 million yuan, and 83 million yuan [1][4] - Earnings per share (EPS) are projected to be 0.04 yuan, 0.06 yuan, and 0.07 yuan for the years 2024, 2025, and 2026 respectively [1][4]

Financial Data and Key Metrics Changes - As of June 30, 2024, the company's main business revenue reached 241 million, a 25.6% increase from 192 million in the same period of 2023 [1] - The overall gross profit was approximately 103 million, up 35.6% from 76.19 million year-on-year, with a gross margin increase of 3.2% [1] - EBITDA was about 94.51 million, a 3.4% increase from 91.41 million in the same period last year [1] - The net profit was approximately 30.78 million, a slight decrease of 2.58 million compared to 33.37 million in the same period of 2023 [1] Business Line Data and Key Metrics Changes - The vocational education segment generated 173 million in revenue, a significant increase of 38.8%, accounting for 72% of total revenue, up 7% from the previous year [1] - Non-vocational education revenue was approximately 68.55 million, a modest increase of 1.4% year-on-year [1] - The average tuition fee in the vocational education segment increased by 39.8%, while accommodation fees rose by 57.6% due to improved living conditions [1] Market Data and Key Metrics Changes - The total number of full-time students increased from 23,423 to 24,439, a growth of 4.3% year-on-year [1] - The employment rate for graduates reached 96.8%, a new high [1] Company Strategy and Development Direction - The company aims to expand its internal growth while optimizing its business and exploring external development opportunities [1] - The focus is on integrating educational resources and enhancing vocational education services, while also responding to national policies supporting private vocational education [1] - The company plans to enhance brand building and establish a unique educational brand with significant influence [1] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong growth in student numbers and tuition fees due to the quality of education and course offerings [1] - The company anticipates a double-digit revenue growth for the full year, with vocational education revenue expected to grow over 25% [1] Other Important Information - The company has initiated the construction of a new campus, which is expected to accommodate over 12,000 additional students [1] - The company is actively involved in industry partnerships and collaborations to enhance educational quality and employment outcomes for graduates [1] Q&A Session All Questions and Answers Question: What is the outlook for maintaining high tuition fee growth? - Management indicated that tuition fee increases are based on student growth and improved course quality, with expectations for continued growth in both student numbers and average tuition fees [1] Question: What are the reasons for the revenue growth this year? - Revenue growth was primarily driven by the vocational education segment, with significant increases in student enrollment and tuition fees [1] Question: What is the progress on the new campus construction? - The new campus construction is underway, with plans to increase student capacity significantly [1] Question: What is the current asset-liability ratio and future improvement plans? - The asset-liability ratio decreased to 63.7%, and the company will continue to monitor and manage this ratio for operational stability [1] Question: What are the latest developments regarding the classification of the vocational college? - The college has expressed its intention to classify as a for-profit institution, pending further instructions from the education authorities [1] Question: How does the company plan to ensure educational quality with increasing student capacity? - The college is focusing on high-level professional development, infrastructure improvements, and enhancing faculty quality to maintain educational standards [1] Question: What are the company's plans for the next five years? - The company aims to expand its educational offerings and explore acquisition opportunities while enhancing its brand and operational capabilities [1]

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 241,324,000, representing a 25.6% increase from RMB 192,102,000 in the same period of 2023[1] - Gross profit increased to RMB 103,337,000, up 35.6% from RMB 76,194,000 year-over-year[1] - EBITDA for the period was RMB 94,513,000, a slight increase of 3.4% from RMB 91,414,000 in the prior year[1] - The net profit for the period was RMB 30,779,000, down 7.8% from RMB 33,367,000 in the same period last year[2] - Basic and diluted earnings per share decreased to RMB 2.71 from RMB 2.94, a decline of 7.8%[3] - The group reported a total segment profit of RMB 61.933 million for the six months ended June 30, 2024, compared to RMB 62.856 million for the same period in 2023[12][13] - The group's pre-tax profit for the six months ended June 30, 2024, was RMB 30,972,000, compared to RMB 33,600,000 for the same period in 2023, reflecting a decrease of approximately 4.85%[27] - Period profit decreased by approximately 7.8% from RMB 33.4 million to RMB 30.8 million due to the aforementioned factors[66] Student Enrollment and Education Services - The total number of full-time students increased by 1,016 to 24,439, reflecting a growth of 4.3% compared to the previous academic year[1] - The average revenue per full-time student in vocational education increased to RMB 6,302, a rise of RMB 1,539 or 32.3% from RMB 4,763 in the previous year[38] - The employment rate for graduates from the vocational education sector is approximately 96.8%, showing a slight increase of 0.1% from 96.7% in the previous year[39] - The company operates 11 schools as of June 30, 2024, down from 12 schools a year earlier, with a notable reduction in the number of new examination business institutions from 2 to 1[36] - The number of full-time vocational education teachers increased by 27, or 6.5%, to 441 as of June 30, 2024[40] - The company has a total of 1,765 teachers as of June 30, 2024, reflecting an increase of 229 teachers or 14.9% compared to 1,536 teachers in the previous year[40] - The high school education segment achieved a 100% university admission rate for 2024, with art and dance examination pass rates exceeding the provincial average by over 20%[47] Financial Position and Liabilities - Total assets less current liabilities amounted to RMB 1,386,054,000, an increase from RMB 1,333,193,000 at the end of 2023[5] - Current liabilities totaled RMB 863,829,000, down from RMB 989,556,000 at the end of the previous year[5] - Non-current liabilities increased to RMB 569,524,000 from RMB 552,008,000[5] - The total equity attributable to owners of the company rose to RMB 813,898,000 from RMB 778,360,000[5] - The group’s total liabilities amounted to RMB 1,433.353 million as of June 30, 2024, with segment liabilities for vocational education at RMB 370.798 million and non-vocational education at RMB 154.003 million[12] - The group’s total borrowings as of June 30, 2024, were RMB 423,333,000, a decrease from RMB 587,100,000 as of December 31, 2023, indicating a reduction of about 28%[30] - The group’s effective tax rate for certain subsidiaries was 15% for the six months ended June 30, 2024, consistent with the previous year, while other subsidiaries were subject to a 25% statutory tax rate[24] Operational Costs and Expenses - Financing costs increased to RMB 32,600,000 for the six months ended June 30, 2024, from RMB 15,840,000 in the same period of 2023, representing a significant rise of approximately 105.4%[20] - The cost of services provided was RMB 137,987,000 for the six months ended June 30, 2024, compared to RMB 115,908,000 for the same period in 2023, indicating an increase of about 19%[21] - Sales costs rose by approximately 19.0% from RMB 115.9 million to RMB 138.0 million, mainly due to increased teaching costs associated with higher student numbers[57] - Selling expenses increased by approximately 33.4% from RMB 8.2 million to RMB 10.9 million, mainly due to higher recruitment advertising costs[60] - Administrative expenses decreased by approximately 0.8% from RMB 34.9 million to RMB 34.6 million, primarily due to reduced office rental costs[61] Strategic Initiatives and Future Outlook - The company plans to enhance brand building and expand its educational scale to create higher value for shareholders and society[55] - The company aims to integrate quality educational resources and expand into a diversified education industry, transitioning from vocational education services to comprehensive talent services[54] - The company plans to expand its market presence by opening 10 new educational institutions across China in the next fiscal year[88] - New product offerings are expected to launch in Q4 2024, targeting a 20% increase in market share within the next two years[89] - Future guidance indicates a projected revenue growth of 10-15% for the upcoming fiscal year[89] - The company is exploring potential acquisitions to enhance its service offerings and expand its customer base[88] Awards and Recognition - The company received the "2023 Annual Reputation Impact Education Service Enterprise" award, recognizing its brand value in the education industry[51] Compliance and Accounting Standards - The group has adopted all new and revised International Financial Reporting Standards effective from January 1, 2024, with no significant changes to accounting policies or financial statement presentation[10] - The group continues to evaluate the impact of new accounting standards that have been issued but are not yet effective, although no significant impact on operational performance or financial position is anticipated at this time[10]

Education and Student Enrollment - As of December 31, 2023, the group has 11 schools, including 1 private vocational college and 1 full-time high school, with a total of 27,662 full-time students, representing a 15.8% increase from 23,888 students in the same period of 2022[6]. - The vocational education segment has 23,494 full-time students, an 18.6% increase from 19,809 students in the same period of 2022, and the group has provided management services for 3,906 students at Sifang College West Campus[7]. - The high school segment has 2,549 students, an 8.0% increase from the previous year, and the new college entrance examination business serves 119 high schools across nearly 20 provinces, providing planning guidance to approximately 8,000 students[8]. - The group has conducted government vocational education social training for 13,739 individuals, enhancing its social influence and supporting talent training for enterprises[7]. - The new Tianji Kindergarten has maintained stable operations with 1,619 enrolled students as of December 31, 2023, contributing to the group's revenue and profit[10]. - The employment rate for the 2022-2023 academic year is approximately 97.9%, an increase of 0.8% from 97.1% in 2022[33]. - As of December 31, 2023, the group provided high school education services to 2,549 students, achieving a university admission rate of approximately 98%[45]. - The new college entrance examination business served nearly 8,000 students, with 6,600 students gaining admission to top universities such as Tsinghua University and Peking University[46]. - The kindergarten business achieved a student enrollment of 1,619 in 2023, maintaining a higher enrollment rate than local competitors by 5 to 15 percentage points[48]. Financial Performance - Revenue for the year ended December 31, 2023, was RMB 420,028,000, an increase of 34.7% from RMB 311,908,000 in 2022[16]. - Gross profit for 2023 was RMB 164,959,000, with a gross margin of 39.3%, down from 46.9% in 2022[16]. - The average revenue per full-time student in vocational education rose to RMB 9,151, a 9.0% increase from RMB 8,398 in 2022[30]. - Operating cash flow for 2023 was RMB 197,839,000, compared to RMB 128,452,000 in 2022, reflecting a significant increase[20]. - The total equity as of December 31, 2023, was RMB 781,185,000, an increase from RMB 725,861,000 in 2022[19]. - The company reported a total reserve available for distribution to shareholders of approximately RMB 176 million as of December 31, 2023[128]. - Net profit increased from approximately RMB 26.7 million for the year ended December 31, 2022, to approximately RMB 39.8 million for the year ended December 31, 2023[73]. Operational Developments - The group is focused on integrating quality educational resources and aims to become a comprehensive vocational talent service provider, covering the entire cycle from education to employment[12]. - The group is actively expanding its vocational education segment, with new campus phases launched in September 2023 and ongoing quality improvement initiatives[7]. - The group has established 13 industry colleges, evolving its model from "work-study alternation 1.0" to "industry-education symbiosis 5.0" for collaborative talent development[7]. - The new campus of Shijiazhuang Institute of Technology has been put into use, accommodating over 8,200 students, contributing to a total service population of 10,902[37]. - The institute has established 28 programs in collaboration with 17 enterprises, with 61 order classes and 16 pilot apprenticeship programs[40]. - The strategic partnership with JD.com and Tencent Cloud aims to enhance talent support for the rapid development of cloud computing and big data industries[40]. - The company is focused on building a provincial-level demonstration high school and enhancing its brand through quality education and resource collaboration over the next 3-5 years[45]. Management and Governance - The company has a strong management team with diverse backgrounds in finance, education, and corporate governance, enhancing its operational capabilities[106]. - The management team includes professionals with extensive experience in investment banking, corporate finance, and regulatory affairs, contributing to strategic decision-making[98]. - The company is committed to maintaining high standards in corporate governance and compliance, ensuring transparency in its operations[107]. - The leadership team is actively involved in strategic planning and execution, positioning the company for future growth and market expansion[106]. Shareholder and Stock Information - The company has issued and paid-up shares totaling 1,161,204,000 as of the report date, with a statutory capital of HKD 30 million divided into 3,000,000,000 shares at HKD 0.01 each[125]. - The company will announce any dividends for the year ending December 31, 2023, pending approval from shareholders at the upcoming annual general meeting[129]. - The company has a stock option plan with a maximum issuance limit of 10% of the total shares, equating to 120,000,000 shares[166]. - The total number of shares that may be issued under the stock option plan as of December 31, 2023, is 114,810,000 shares, representing approximately 9.89% of the issued shares[168]. - The company has established a trust controlled by HSBC International Trustee Limited, which holds 754,590,000 shares in the company[164]. Compliance and Risk Management - The company emphasizes its commitment to compliance with relevant laws and regulations, establishing a comprehensive compliance operating mechanism[118]. - The company faces various risks related to business, industry, and regulatory changes, which are detailed in the prospectus[120]. - The company has established a detailed system for legal compliance, financial management, and operational planning to meet the latest legal requirements[118]. Future Outlook - The company aims to strengthen its competitive position in the early childhood education market despite a declining number of eligible children[48]. - The company plans to focus on both internal development and external acquisitions to drive business growth in vocational education and industry-education integration[63]. - By 2025, the national pilot cities for industry-education integration are expected to reach around 50, with over 10,000 industry-education integration enterprises to be cultivated nationwide[58]. - The company is committed to improving educational quality and expanding vocational education funding channels as per national policies[58].

Investment Rating - The report maintains a "Buy" rating for the company [14] Core Views - The company focuses on new vocational education as its main development line, emphasizing diversified comprehensive services with both internal growth and external expansion [13] - The new campus in Gaoyi is expected to contribute to revenue growth as it gradually fills with students, with projected revenues of 5.31 billion, 6.04 billion, and 6.56 billion for 2024-2026 [13] - The company reported a total revenue of 420 million in 2023, a year-on-year increase of 34.66%, with net profit attributable to shareholders reaching 39.91 million, up 46.19% year-on-year [8][12] Financial Performance - The vocational education segment generated revenue of 270 million, a year-on-year increase of 20.90%, while the non-vocational education segment achieved 150 million, up 69.56% year-on-year [9] - The average tuition fee per student increased to 9,151, a 9.0% year-on-year rise, while the average accommodation fee reached 1,240, up 17.3% year-on-year [9] - The gross profit margin decreased by 7.7 percentage points to 39.3%, primarily due to increased operational costs from the new campus, but is expected to recover as the campus reaches full capacity [17] Future Projections - Expected revenues for 2024, 2025, and 2026 are projected at 531 million, 604 million, and 656 million respectively, with net profits of 53 million, 79 million, and 97 million [19] - Earnings per share (EPS) are forecasted to be 0.05, 0.07, and 0.08 yuan per share for the years 2024, 2025, and 2026 [19] Market Position - The company is positioned as a leading player in the regional vocational education sector, benefiting from the integration of new campuses and the consolidation of revenue from the Yuying High School [12][13]

Financial Performance - Revenue for the year ended December 31, 2023, was RMB 420,028,000, representing an increase of RMB 108,120,000 or 34.7% compared to RMB 311,908,000 in 2022[4] - Gross profit for the same period was RMB 164,959,000, up by RMB 18,575,000 or 12.7% from RMB 146,384,000 in 2022[4] - EBITDA for the year was RMB 167,429,000, an increase of RMB 48,335,000 or 40.6% compared to RMB 119,094,000 in 2022[4] - Basic and diluted earnings per share increased to RMB 3.50, up by RMB 1.11 or 46.4% from RMB 2.39 in 2022[4] - The net profit for the year was RMB 39,836,000, up from RMB 26,718,000 in the previous year, marking an increase of about 49.0%[47] - The pre-tax profit increased to RMB 39,160,000 in 2023 from RMB 27,414,000 in 2022, reflecting a growth of approximately 43.0%[46] - Total other income and gains netted RMB 43,851,000 in 2023, compared to RMB 35,186,000 in 2022, reflecting a growth of 24.5%[92] Enrollment and Student Statistics - Total full-time student enrollment reached 27,662, an increase of 3,774 students or 15.8% from 23,888 in the previous academic year[4] - The number of students enrolled in vocational education at Shijiazhuang Institute of Technology rose by 25.4% to 21,232 for associate degree programs[135] - The company provided services to 3,906 students at the Sifang College West Campus as of December 31, 2023[108] - The company provided high school education services to 2,549 students as of December 31, 2023[177] - Employment rate for 2023 reached 97.9%, an increase of 0.8% from 2022[112] Assets and Liabilities - Current liabilities as of December 31, 2023, amounted to RMB 989,556,000, reflecting a significant increase due to capital expenditures for acquiring education-related assets[5][6] - The net current liabilities of the group were approximately RMB 315.2 million, raising concerns about the group's ability to continue as a going concern[6] - The total current assets as of December 31, 2023, were RMB 674,323,000, compared to RMB 503,284,000 in 2022[31] - The total assets as of December 31, 2023, amounted to RMB 2,322,749,000, compared to RMB 2,056,000,000 in 2022, showing an increase of approximately 12.9%[41] - The company has a total liability of RMB 1,229,601,000, with interest-bearing bank and other borrowings amounting to RMB 693,383,000[59] Capital Expenditures and Financing - The company reported a significant increase in capital expenditure, totaling RMB 421,224,000 in 2023, compared to RMB 83,025,000 in 2022[41] - The company’s financing costs rose to RMB 42,745,000 in 2023 from RMB 35,625,000 in 2022, reflecting an increase of approximately 19.0%[46] - Capital expenditures reached RMB 886,915,000, with RMB 615,696,000 allocated to vocational education and RMB 271,219,000 to non-vocational education[59] Educational Initiatives and Collaborations - The company focuses on the education industry and has diversified revenue sources and a broad customer base[78] - The company is committed to the integration of industry and education, emphasizing the development of new vocational education[78] - The strategic agreement with JD.com for the establishment of a joint e-commerce integration demonstration base was signed in March 2023[117] - Tencent Cloud and the institute jointly established the Tencent Cloud Artificial Intelligence Industry Academy to support talent development in cloud computing and big data[117] - The company established 13 industry colleges related to emerging industries, enhancing collaboration with over 700 enterprises, including more than 60 Fortune 500 companies[144] Future Outlook and Strategic Goals - The company maintained a positive outlook for future growth, supported by increased student enrollment and operational cash flow[35] - The company plans to establish approximately 150 industry-education integration entities by 2025, with 50 entities targeted for completion by the end of 2023 and another 50 by the end of 2024[188] - The company aims to improve vocational school funding by implementing a differentiated per-student funding system based on professional categories, gradually increasing funding levels to enhance educational conditions[187] - The company is actively exploring the "Industry-Education Symbiosis 5.0" model to align talent cultivation with local economic development needs[142] Awards and Recognition - The company was awarded the "2023 Most Investment Value Brand" at the 2023 China Brand Boao Summit[182] - The company received multiple awards in December 2023, recognizing its value in social services and brand image in the new vocational education sector[152][153][154]

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 192,102,000, representing a 32.6% increase from RMB 144,822,000 in 2022[8]. - Gross profit for the same period was RMB 76,194,000, with a gross margin of 39.7%, down from 49.6% in 2022, indicating a decrease of 9.9 percentage points[8]. - EBITDA for the first half of 2023 was RMB 91,414,000, up 37.2% from RMB 66,650,000 in 2022[8]. - Profit for the period increased by approximately 23.1% from RMB 27.1 million for the six months ended June 30, 2022, to RMB 33.4 million for the six months ended June 30, 2023[59]. - Profit before tax increased to RMB 33,003,000, up 21.5% from RMB 27,122,000 in the previous year[116]. - The basic and diluted earnings per share for the period were RMB 2.94, compared to RMB 2.37 in 2022, reflecting a growth of 24%[116]. - The company reported a total comprehensive income of RMB 39,608,000 for the period, compared to RMB 36,924,000 in 2022, an increase of 7.3%[116]. Student and Teacher Metrics - Total number of full-time students increased to 23,423, a rise of 25.2% from 18,704 in 2022[9]. - The total number of full-time teachers rose to 792, reflecting a 32.4% increase from 598 in the previous year[9]. - The student retention rate improved to 98.7%, an increase of 5.8% from 93.3% in 2022[9]. - The average revenue per student in vocational education increased to RMB 4,763, up by RMB 243 or 5.4% year-over-year[17]. - The employment rate for graduates as of June 30, 2023, was approximately 96.7%, a slight increase of 0.1% from the previous year[19]. - The high school education segment served 2,361 students, achieving a university admission rate of approximately 98% and an art examination pass rate of 94.7%[31]. - The enrollment in the New Horizon Kindergarten reached a record high of 1,895 students for the 2022-2023 academic year, marking a continuous growth over four years[35]. Educational Services and Programs - The company continues to focus on personalized education services and solutions to enhance student capabilities[10]. - The company has established 22 programs in collaboration with 14 enterprises, with 20 order classes and 15 pilot apprenticeship programs in place as of June 30, 2023[25]. - The company has formed partnerships with over 700 enterprises, including more than 60 Fortune 500 companies, to support talent development in emerging industries[26]. - The company aims to deepen the integration of industry and education through internal development and external acquisitions[3]. - The company aims to establish approximately 150 industry-education integration entities by 2025, enhancing collaboration between vocational schools and enterprises[43]. Financial Position and Assets - Current assets increased from approximately RMB 503.3 million as of December 31, 2022, to approximately RMB 612.8 million as of June 30, 2023, mainly due to increases in prepayments, deposits, and other receivables[60]. - Current liabilities increased from approximately RMB 559.6 million as of December 31, 2022, to approximately RMB 654.3 million as of June 30, 2023, primarily due to increased short-term borrowings and a decrease in contract liabilities[60]. - The current ratio improved from 89.9% as of December 31, 2022, to 93.7% as of June 30, 2023, due to a greater increase in current assets compared to current liabilities[62]. - The debt-to-asset ratio increased from approximately 62.9% as of December 31, 2022, to approximately 65.1% as of June 30, 2023, due to an increase in interest-bearing loans and other borrowings[63]. - Non-current assets as of June 30, 2023, totaled RMB 1,559,777,000, an increase from RMB 1,452,178,000 as of December 31, 2022[119]. - Total liabilities as of June 30, 2023, were RMB 1,414,265,000, compared to RMB 1,229,601,000 at the end of 2022, reflecting an increase of 15%[119]. Governance and Management - The company has adopted the corporate governance code as per the listing rules and has complied with most of its recommended best practices[78]. - The management team includes key positions such as Chief Executive Officer, Chief Financial Officer, and Executive Vice Presidents overseeing various operational areas[75]. - The company is committed to maintaining high levels of corporate governance to protect shareholder interests and enhance corporate value[78]. - There were changes in the board, with Mr. Li Yusheng resigning as executive director and Mr. Li Yasheng being appointed as chairman[76]. - The audit committee, composed of three independent non-executive directors, reviewed the unaudited interim results for the six months ended June 30, 2023[81]. Shareholder Information - As of June 30, 2023, Mr. Li Yurun holds 754,590,000 shares, representing 64.98% of the company's equity[85]. - As of June 30, 2023, the total number of issued shares is 1,161,204,000[89]. - The company did not declare any interim dividend for the six months ended June 30, 2023, consistent with the previous year[80]. - The company has a stock option plan with a maximum limit of 10% of the issued shares, equating to 120,000,000 shares, as of the reporting date[94]. - The company aims to attract and retain talented individuals through its stock option plan, which incentivizes contributions to the group's performance and success[93]. Cash Flow and Investments - The cash flow from operating activities showed a net outflow of RMB 1,715 thousand for the six months ended June 30, 2023, compared to a net outflow of RMB 4,989 thousand in the same period last year, indicating an improvement in cash flow management[128]. - The net cash flow from investing activities was RMB (226,363,000), significantly higher than RMB (81,132,000) in the previous year, indicating increased capital expenditures[130]. - The net cash flow from financing activities was RMB 169,674,000, slightly down from RMB 169,920,000 in the same period last year[130]. - The company has implemented a share buyback program, repurchasing shares worth RMB 2,344 thousand during the reporting period[125]. Market and Competitive Position - The company plans to continue expanding its market presence and investing in new technologies to enhance its competitive edge in the education sector[126]. - The company is actively exploring investment and acquisition opportunities in the vocational education sector to enhance growth potential[50]. - The company is responding to national policies by establishing a diversified educational industry structure centered on new vocational education development[47].

Financial Data and Key Metrics Changes - In the first half of the year, total revenue reached 192 million yuan, with a year-on-year growth of 32.6% [3][4] - The revenue from vocational education accounted for 65% of total revenue, while non-vocational education contributed 35% [4][6] - The average annual compound growth rate since the company went public in 2018 is 16.7% [4][6] Business Line Data and Key Metrics Changes - Vocational education revenue grew by 13.2%, while non-vocational education revenue surged by 94%, primarily due to the acquisition of Shijiazhuang Yuying Experimental High School [4][6] - The number of full-time students increased by 13.6%, reaching a total of 19,167 students [11][12] - The tuition fee cap for vocational courses increased by 30.8%, contributing to revenue growth [12][15] Market Data and Key Metrics Changes - The overall education expenditure in 2022 reached 6.1 trillion yuan, with a compound annual growth rate of 7.9% [10][11] - The vocational education market is expected to exceed 900 billion yuan in 2023, with an annual growth rate of 11.7% [9][10] Company Strategy and Development Direction - The company aims to expand its service boundaries by exploring opportunities in vocational education and related industries, focusing on a dual-driven model of internal development and external acquisitions [20][22] - The company is enhancing its educational quality and conditions to attract more students, particularly in its new high school and vocational education sectors [18][19] Management's Comments on Operating Environment and Future Outlook - The management highlighted the increasing demand for vocational education due to industrial upgrades, with a projected talent gap in manufacturing exceeding 30 million by 2025 [9][10] - The company is committed to responding to national policies encouraging vocational education development and integrating industry with education [20][22] Other Important Information - The company has maintained a stable dividend payout ratio, increasing it to 30% of operating profit in the previous year [7][8] - The company has repurchased approximately 7-8% of its total shares since its listing, enhancing shareholder value [8][9] Q&A Session All Questions and Answers Question: Can you explain the business model for the new college entrance examination services? - The business model includes two main parts: assisting students with college entrance exam planning and registration, and collaborating with high schools to enhance local teacher resources [22][23] Question: Why focus on regions like Hangzhou for expansion? - The company views Hangzhou and similar regions as having a strong emphasis on education, making them ideal for expansion [23]